Homehealth, Inc. v. Heritage Mut. Ins. Co.

• Decision Date: 05 March 1996
• Docket Number: No. 17A05-9504-CV-135,17A05-9504-CV-135
• Parties: HOMEHEALTH, INC., and Gandhi Lingamneni, Appellants-Plaintiffs, v. HERITAGE MUTUAL INSURANCE COMPANY, United Farm Bureau Insurance Company and Grant Van Horne, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 195

662 N.E.2d 195

HOMEHEALTH, INC., and Gandhi Lingamneni, Appellants-Plaintiffs, v. HERITAGE MUTUAL INSURANCE COMPANY, United Farm Bureau

Insurance Company and Grant Van Horne, Appellees-Defendants.

No. 17A05-9504-CV-135.

Court of Appeals of Indiana.

March 5, 1996.

Appeal from the Dekalb Circuit Court; Honorable Paul R. Cherry, Judge. Cause No. 17C01-9107-CP-61.

Randal S. Forbes, Angola, for Appellants.

Edward L. Murphy, Diana C. Bauer, Miller Carson Boxberger & Murphy, Fort Wayne, for Grant Van Horne.

James H. Austen, Starr Austen Tribbett & Myers, Logansport, for Heritage Mutual Insurance Company and United Farm Bureau Mutual Insurance Company.

OPINION

KIRSCH, Judge.

Homehealth, Inc. ("Homehealth") and Gandhi Lingamneni (collectively "Appellants") appeal the trial court's judgment of involuntary dismissal in favor of Heritage Mutual Insurance Company ("Heritage"), United Farm Bureau Insurance Company ("Farm Bureau"), and Grant Van Horne (collectively "Appellees"). The only issue for our review is whether the trial court's denial of Appellants' motion for continuance was an abuse of discretion.

We reverse.

FACTS AND PROCEDURAL HISTORY

On July 15, 1991, Appellants filed this action against Appellees for damages arising from an alleged breach of a settlement agreement in two prior cases. On September 5, 1991, Heritage and Farm Bureau filed their answer which included a non-party defense against John Grimm, counsel for Appellants. On September 19, 1991, Van Horne filed his answer which also included a non-party defense against Grimm.

On December 3, 1991, Van Horne filed a motion to disqualify counsel, claiming that Grimm was a material witness to the events which formed the basis for the lawsuit. On January 7, 1992, the trial court, in a seven-page entry, denied the motion, without prejudice, stating that Van Horne had failed to demonstrate that any of the requirements for disqualification had been met. Relevant parts of the entry read:

"[A]t this point in the record of proceedings there is neither established nor alleged any facts from which a reasonable inference may be drawn that attorney John C. Grimm did act negligently.

....

"7. That Indiana Rule of Professional Conduct 3.7 prohibits an attorney from representing a party if it is likely the attorney will be a necessary witness in the case (with some exceptions and a proviso).

"8. That the record of proceedings in this case at this point has not yet established whether the settlement negotiation participants ... agree or differ in their recollections of what was said and done and the Court needs to know this in order to determine whether or not attorney John C. Grimm is a 'necessary' witness within the provision of Indiana Rule of Professional Conduct 3.7(A) (if all participants agree in their recollection of material facts and statements then he would not be a 'necessary' witness but if they differ in their recollections then he would likely be a 'necessary' witness).

"9. That in his oral argument to the Court on January 3, 1992 attorney John C. Grimm has alleged that for him to be disqualified from further service as Plaintiffs' attorney herein would cause a substantial hardship on his clients (presumably to invoke the exception set forth at Indiana Rule of Professional Conduct 3.7(a)(3)) but the record of proceedings in this case at this point has not yet established the possibility or likelihood or a resulting substantial hardship to the Plaintiffs.

"10. That therefore for these reasons the Court is unable to determine at this point the impact Indiana Rule of Professional Conduct 3.7 may have on this issue.

"11. That Indiana Rule of Professional Conduct 1.7 prohibits an attorney from representing a client if the representation would be a conflict of interest or would be diminished by the attorney's own interests.

....

"13. That if indeed this case does come to a point where there exists some valid basis (beyond mere bald general allegations) tending to prove (or from which a reasonable inference can be drawn) that not only the Plaintiffs Gandhi Lingamneni and Homehealth, Inc. but also their attorney John C. Grimm may have been at fault then the interests of the Plaintiffs and their attorney would be incompatible and conflicting and for attorney John C. Grimm to then continue to represent the Plaintiffs in this matter would constitute a violation of Indiana Rule of Professional Conduct 1.7 unless the exception is [sic] that rule's subparagraph (b)(2) would be invoked.

....

"15. That further development of the record of proceedings in this case (after completion of further discovery) is necessary in order for the Court to determine whether or not attorney John C. Grimm should be disqualified from further representing the Plaintiffs.

....

"17. That at this time attorney John C. Grimm is not disqualified to represent Plaintiffs Gandhi Lingamneni and Homehealth, Inc. in this case and the Defendant Grant M. VanHorne's [sic] Motion to Disqualify Counsel (which was filed with the Court on December 3, 1991) is denied without prejudice."

Record at 122-26.

On March 4, 1994, the trial court held a pre-trial conference in which all parties participated. The trial court scheduled a final pre-trial conference for December 2, 1994, and a three-day bench trial to commence on January 3, 1995.

On December 5, 1994, Grimm filed a motion to withdraw his appearance on behalf of Appellants, claiming that, as a result of certain discovery requests, he had recently realized that he had a conflict of interest. At the same time, Grimm also filed a motion for continuance, citing undue prejudice and hardship on the Appellants. Appellees objected to the motion for continuance; Van Horne also objected to the motion to withdraw.

On December 20, 1994, the trial court held oral arguments on Grimm's motions. On the same day, the trial court granted Grimm's motion to withdraw on the grounds that Grimm was a material witness. The court denied the motion for continuance stating:

"6. That Plaintiff Ghandhi [sic] Lingamneni has known since December 3, 1991 (when Defendant Grant M. VanHorne [sic] filed his written motion seeking the disqualification of Attorney John C. Grimm) that his Attorney John C. Grimm might be called as a material witness at the trial and Plaintiff Ghandi [sic] Lingamneni was present in Court with his Attorney John C. Grimm on January 3, 1992 when attorney arguments on the issue of whether John C. Grimm should be disqualified were made to the court and Plaintiff Ghandhi [sic] Lingamneni has known since approximately November 1, 1994 that one of the defenses Defendant Grant M. VanHorne [sic] and the other Defendants were indeed pursuing is the alleged negligence of his Attorney John C. Grimm and as of approximately November 1, 1994 it became much more certain that John C. Grimm would be a material witness in the trial of this case."

Record at 500.

On the same day, December 20, 1994, Appellants filed a letter from the law firm of Price and Barker stating that the firm declined to represent Appellants in this matter but would reconsider if the Appellants obtained a continuance of the January trial date. On December 27, 1994, Michelle Simmons filed a conditional appearance and motion for continuance. The trial court held a hearing on the same day, denied the motion, and allowed Simmons to withdraw. On December 29, 1994, Appellees filed their portion of pre-trial orders with the court. ¹ On January 3, 1995, Randal Forbes filed a motion for leave to file an appearance for limited purpose. Forbes moved for the court to reconsider its December 20, 1994 ruling which allowed Grimm to withdraw and its December 27 ruling denying a continuance. After a hearing, the court denied both motions and granted Forbes' oral motion to withdraw his appearance.

The court instructed Appellants to present evidence for their case in chief. Lingamneni informed the court that he was unable to proceed without the assistance of counsel and that Homehealth, of which he was president, was a corporation and, therefore, could not appear without counsel. The court entered a judgment of involuntary dismissal pursuant to Ind.Trial Rule 41(B) on all pending issues. ²

DISCUSSION AND DECISION

The decision to grant or deny a continuance is within the sound discretion of the trial court, and we will not reverse that decision unless the trial court has abused its discretion. Royalty Vans, Inc. v. Hill Brothers Plumbing and Heating, Inc., 605 N.E.2d 1217, 1220 (Ind.Ct.App.1993). A trial court abuses its discretion when it reaches a conclusion which is clearly against the logic and effect of the facts or the reasonable and probable deductions which may be drawn therefrom. Id. The denial of a motion for continuance is an abuse of discretion only if the movant demonstrates good cause for granting the motions. Danner v. Danner, 573 N.E.2d 934, 937 (Ind.Ct.App.1991), trans. denied; see also Ind.Trial Rule 53.5. The United States Supreme Court has addressed the issue of continuances by stating:

"The matter of continuance is traditionally within the discretion of the trial judge, and it is not every denial of a request for more time that violates due process even if the party fails to offer evidence or is compelled to defend without counsel. Contrawise, a myopic insistence upon expeditiousness in the face of a justifiable request for delay can render the right to defend with counsel an empty formality. There are no mechanical tests for deciding when a denial of a continuance is so arbitrary as to violate due process. The answer must be found in the circumstances present in every case, particularly in the reasons presented to the trial judge at the time the request was denied."

Ungar v. Sarafite 376 U.S. 575, 589-90, 84 S.Ct. 841, 849-50, 11 L.Ed.2d 921 (1964) (citations omitted).

Appellants assert that their counsel's withdrawal was unexpected, and that, despite due...